Question

Ex 10-3 On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for S2,000. During the first year, the band performs 45 concerts.

 Compute the first-year depreciation using the straight-line method.

Ex 10-4 On January 1, the Matthews Band pays $65,800 for sound equipment. The band estimates it will use this equipment for four years and perform 200 concerts. It estimates that after four years it can sell the equipment for $2,000. During the first year, the band performs 45 concerts.

 Compute the first-year depreciation using the units-of-production method.

Ex 10-5 A building is acquired on January I at a cost of $830,000 with an estimated useful life of eight years and a salvage value of $75,000. Compute depreciation expense for the first three years using the double declining-balance method.

Answer 1

Ex 10-3	Straight line method of depreciation
	(cost- salvage value)/useful life
	(65800-2000)/4
	15950	answer
Ex10-4	units of production method
	(cost - salvage value)/estimated activitu
	(65800-2000)/200
	319
	depreciation rate =		319 per concert
	Depreciation expense =319*45
			14355	answer
Ex 10-5	Double declining
	DDB rate =	1/8*2
		25%
	year	opening	Depreciation	Accumulated	Book
		bal	expense	dep	value
	1	830,000	207500	207,500	622,500
	2	622,500	155625	363,125	466,875
	3	466,875	116719	479,844	350,156